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All data and information in this case study are as of December 31, 2015, unless otherwise noted.

Challenge

The industrial sector accounts for approximately half of global energy use and produces approximately 1.3 billion metric tons of greenhouse gas emissions annually.i,ii Manufacturers can manage their energy consumption and waste production, as well as associated costs and environmental impacts, by improving the efficiency of their facilities and production processes.

Capsugel designs, develops and manufactures a wide range of innovative dosage forms for the biopharmaceutical and consumer health and nutrition industries.

Manufacturing hard capsules is an energy-intensive process with energy costs representing a significant portion of the total cost.

Response

Capsugel’s Colmar manufacturing facility has historically used three natural gas boilers to generate steam. As two of these boilers were approaching end-of-life in 2014, Capsugel reviewed various options to replace and/or improve the steam-generation process.

The city of Colmar has two incinerators for burning non-recyclable waste. Steam produced by these incinerators is used for heating public buildings and social housing. During mid-season and summer, steam from the city’s incinerators is not required and is discharged into the atmosphere.

Capsugel identified an opportunity to use this steam – which otherwise would be wasted – for its own consumption. Working closely with Engie-Cofely, the site maintenance contractor, Capsugel developed a ground-breaking vaporisation unit capable of converting city steam into site steam for its manufacturing facility. In parallel, Capsugel collaborated with the French government environment agency ADEME and the city of Colmar to connect the city grid to Capsugel and signed a ten-year contract.

Resultsiii

The Colmar Green Steam project generates environmental, social, and economic benefits for both Capsugel and the Colmar community.

Capsugel’s Colmar plant will obtain a significant portion of its annual steam needs from the city with no additional greenhouse gas emissions from Colmar city incinerators. This is expected to reduce Capsugel’s energy costs and improve its carbon footprint.

Removing the existing boilers at the Capsugel site creates a positive environmental impact by reducing greenhouse gas and air emissions, including SO2, NOX, CO, Dust, and CO2.

The city of Colmar generates a revenue stream, which benefits the local community.

Looking Forward

Capsugel is continuing to focus on innovative, environmental sustainability projects at the company.

Capsugel began participating in KKR’s green program in 2012 and is communicating results for the second time. For more on Capsugel’s sustainability efforts, visit its website.

iii Self-reported portfolio company data is not calculated, reviewed or independently verified by KKR or KKR Capstone. For more information regarding the results methodology for companies evaluating their own data, please see the methodology section. There is no guarantee that any GSP-related avoided costs or added efficiencies will positively impact the portfolio company’s valuation or performance.

Portfolio company data represents 2016 results, published in November 2016. This case study may contain forward looking statements including descriptions of planned projects and projected results and savings. These statements are subject to the risk that the projects will not develop as planned or at all or that projected results and savings are not realized.